Energy-to-technologies conglomerate DCC expects to see more acquisition opportunities as oil majors slim down, and is looking to expand its energy business beyond Europe into areas such as South East Asia and South America over the long term.
DCC earlier this year agreed to buy French gas firm Butagaz from oil group Shell for €464 million in its biggest ever deal.
It is aiming to spend around £150 million a year on acquisitions across all of its business, but would consider more for the right deal, chief executive Tommy Breen said.
While DCC is looking to grow all three of its core business areas of energy, technology and healthcare, the fact oil companies such as Shell and BP are selling distribution and marketing assets to focus on exploration and production is providing particular opportunities, he said.
Donal Murphy, managing director of DCC Energy, said the firm had researched markets such as South East Asia and South America where demand for liquefied petroleum gas (LPG) is growing.
“We’re learning about those markets, I think we’d be certainly be hopeful that there will be opportunities,” he said.
“If we take a long term view, we would be disappointed if our Energy business was not operating outside of Europe over the next three to five years,” he added.
DCC, whose activities range from oil distribution to waste management, made an operating profit of £222 million in the year ended March 31st, with about 55 per cent coming from its energy business.
While more than two-thirds of profit is made in Britain and Ireland, the group has moved into western Europe in recent years. That region would continue to be a focus for expansion, while Canada and the United States were also possibilities.
DCC has bought assets from oil companies such as Chevron, ExxonMobil and Total and Mr Breen said this would help it secure more deals in future.
“We’d like to think ... that we’ve developed a partnership relationship with them and that whenever they come to sell other assets that there will be opportunity for us,” he said.
“There will definitely be more deals, probably most of them will be in the kind of £100 to £200 millionrange, but if something like Butagaz came along again then absolutely, if it was right we would do it,” the 55-year-old said.
Reuters
